Unions

I know everyone cares what I think...so here:

Rule 1: Facts first, normative decisions second. Basic economics:

1. The only relevant variable when discussing pay is total compensation...even better would be total costs to employer.
2. In the private sector, there are 3 players competing for $ inside the firm...the customer, the capitalist (shareholder), and the worker, and usually at least 4 players competing for $ outside the firm: other firms competing for customers, other firms competing for capital, , suppliers (for whom firm 1 is the customer), and other workers competing for jobs.
3. Competition between firms (basically) sets the price of goods in the market economy, so there is (usually) no surplus in the short term to extract from customers or suppliers. Therefore, unions tend to extract $ from capital. The workers get paid more, and the return on capital drops.
4. As the price of labor (in a union shop) rises, the capitalists will tend to buy less of it. Generally, unionization also results in hiring fewer (new) workers.
5. Also, unions tend to make labor more rigid and less flexible, and according to Pournelle's Iron Law, focused on preserving advantages.
6. This has the effect of making the company that the union works for less competitive, and ultimately killing the company.
7. Summary of private unions: Good for existing workers. Good for new workers who do get hired. Bad for capitalists. Bad for the unemployed. Bad for innovation and the health of the company.
8. Public unions: there are still 3 players, but ... instead of customers, you have taxpayers, who have little ability to switch governments.
9. Same economic rules apply, so public unions are good for existing workers, good for new workers in the government, bad for taxpayers, bad for other government priorities, bad for the unemployed, bad for innovation in government.
10. Megan McArdle has an interesting comment on the topic here

    I generally assume that at any given time, taxes are, within some margin of error, basically as high as taxpayers are willing to tolerate--or at least, as high as they're willing to tolerate for a given level of services. To put it another way, taxpayers are virtually never looking to pay higher taxes so that their teachers, firefighters and cops can have higher pay.

11. Will Wilkinson does too.

    We’d very much like to increase nutritional assistance for impoverished children. In fact, we’d love to. What could be better? But, you see, we have promised very large, richly-deserved pensions to some very important people very dear to our hearts, and, to put it frankly, money these days is, well, tight. I know. It’s very dispiriting. If only the selfish rich bastards would pay their fair share of taxes! But, no. No. Whatever happened to the idea that we’re in it together? Huh? Whatever happened to love for our fellow man? It’s sad. Anyway, we are so sorry the bastards have chosen to steal from the mouths of hungry children. I wish we could do something. I really wish we could.

12. Robert Reich, on the other hand, seems to be ignoring all the economic issues, and blaming it on the rich. Not, mind you, that he's wrong in his focus...just that it's irrelevant to the union issue.